Quick answer
Amortization is paying a loan off in equal instalments that each cover the month's interest and reduce the balance. Enter the loan amount, annual rate and term to get the monthly payment, the total interest and the total repaid.
In the early years most of each payment is interest, and the share that reduces the balance grows over time. That is why paying a little extra early shortens a loan noticeably.
Related tools: APR Calculator: Annual percentage rate of a loan once upfront fees are counted. Loan Calculator: Estimate your monthly loan payment, total interest and total cost. Refinance Calculator: Monthly savings and break-even time from refinancing.
How to use the Amortization Calculator
- Enter loan amount ($) (above 0).
- Enter interest rate (APR) (%) (between 0 and 100).
- Enter term (years) (between 0 and 50). It starts at 30.
- Optionally, enter extra monthly payment ($) (0 or more).
- Press Calculate to see the result, and use Reset to start again.
| Input | What to enter | Allowed values |
|---|---|---|
| Loan amount | A number, in $ | > 0 |
| Interest rate (APR) | A number, in % | ≥ 0, ≤ 100 |
| Term | A number, in years | > 0, ≤ 50, starts at 30 |
| Extra monthly payment (optional) | A number, in $ | ≥ 0 |
Formula and method
Formula
M = P·i ÷ (1 − (1 + i)^−n), i = APR ÷ 12, n = months
IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice.
Fixed-rate, fully amortizing loan with monthly compounding; excludes fees, insurance and taxes.
Worked examples
This example is verified: each one is an automated test case that the live calculator must reproduce exactly.
Example 1
Inputs: Loan amount = 250000; Interest rate (APR) = 6; Term = 30.
| Result | Value |
|---|---|
| Monthly payment | $1,498.88 |
| Total interest | $289,595.47 |
| Total paid | $539,595.47 |
| Payments made | 360 |
The first line is the headline result (monthly payment). Below it the amortization Calculator lists total interest, total paid and payments made, which describe the same case from other angles. IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice.
Interest versus principal in the first payment
For $250,000 at 6% over 30 years the payment is $1,498.88. In the first month the interest is $250,000 × 0.06 ÷ 12 = $1,250.00, so only $1,498.88 − $1,250.00 = $248.88 reduces the balance. The next month's interest is calculated on the slightly smaller balance, and the principal share grows by a small amount every month.
How the term changes the total interest
A $250,000 loan at 6% over different terms.
Every figure in this table comes from running this calculator, so it matches what the form returns.
| Term (years) | Monthly payment | Total interest |
|---|---|---|
| 15 | $2,109.64 | $129,735.57 |
| 20 | $1,791.08 | $179,858.64 |
| 30 | $1,498.88 | $289,595.47 |
What happens with invalid input
These messages are produced by the calculator itself, so you know what to fix.
- Extra monthly payment: entering "-5" shows "Extra monthly payment must be at least 0." beside that field and no result.
Choosing between the Amortization Calculator and similar calculators
Each row shows what a related calculator on this site asks for and what it returns, so you can pick the one that matches your question.
| Calculator | You enter | It returns |
|---|---|---|
| [APR Calculator](/finance/apr-calculator/) | loan amount, upfront fees and note rate | APR |
| [Loan Calculator](/finance/loan-calculator/) | loan amount, interest rate and term | Monthly payment |
| [Refinance Calculator](/finance/refinance-calculator/) | current balance, current rate and current remaining term | Monthly savings |
| [Mortgage Calculator](/real-estate/mortgage-calculator/) | home price, down payment and interest rate | Total monthly payment |
| [Auto Loan Calculator](/finance/auto-loan-calculator/) | vehicle price, down payment and interest rate | Monthly payment |
Background: loans and mortgages
The interest rate is the cost of borrowing the principal; the APR also folds in certain fees, so a lower rate with high fees can have a worse APR. These calculators use the rate you enter and do not add fees, insurance or taxes, so add fees to the principal if you want to include them.
A fixed-rate loan is paid in equal instalments, early ones mostly interest. Extra payments go straight to principal, which shortens the loan and cuts interest; adjustable rates, escrow changes and prepayment penalties are not modelled.
Assumptions and limitations
- 0% interest divides the principal evenly
- Rate up to 100%
- Term up to 50 years
Results are estimates for planning, not financial advice. Lender terms, fees, taxes and rounding rules can change real figures, so confirm important numbers with your lender or a licensed adviser.
If a required value is empty, not a number, or outside its allowed range, the form marks that field with a message and shows no result instead of a misleading number. The automated checks deliberately try invalid entries for extra monthly payment to confirm this.
Frequently asked questions
What does the Amortization Calculator calculate?
Full amortization schedule with optional extra monthly payments. It returns Monthly payment, Total interest, Total paid and Payments made.
What formula does the Amortization Calculator use?
M = P·i ÷ (1 − (1 + i)^−n), i = APR ÷ 12, n = months. Fixed-rate, fully amortizing loan with monthly compounding; excludes fees, insurance and taxes.
What do I need to enter in the amortization Calculator?
You enter Loan amount ($), Interest rate (APR) (%) and Term (years). Optional: Extra monthly payment ($).
How is the result rounded or limited?
IEEE-754 double precision; money shown to cents, rates to 4 decimals. Results are estimates, not financial advice. 0% interest divides the principal evenly.
What are the limits of this calculator?
0% interest divides the principal evenly. Rate up to 100%. Term up to 50 years.
What is an example of a amortization result?
With loan amount 250000, interest rate (APR) 6 and term 30, the monthly payment is $1,498.88.
Can I rely on this calculator for a decision?
Results are estimates for planning, not financial advice. Lender terms, fees, taxes and rounding rules can change real figures, so confirm important numbers with your lender or a licensed adviser. For this calculator in particular: 0% interest divides the principal evenly.
Related calculators
- APR Calculator — Annual percentage rate of a loan once upfront fees are counted.
- Loan Calculator — Estimate your monthly loan payment, total interest and total cost.
- Refinance Calculator — Monthly savings and break-even time from refinancing.
- Mortgage Calculator — Monthly mortgage payment with property tax, insurance and HOA.
- Auto Loan Calculator — Monthly car payment after down payment and trade-in.
- Interest Rate Calculator — Annual interest rate implied by a loan amount, payment and term.
- HELOC Calculator — Interest-only draw-period payment and the repayment-period payment of a home equity line.
- Cash Back or Low Interest Calculator — Compare a cash rebate with a lower financing rate on a purchase.
- Lease Payment Calculator — Monthly lease payment from capitalized cost, residual value and rate.
Sources
- Standard time-value-of-money relations (e.g. Brealey, Myers & Allen, Principles of Corporate Finance)
Content last reviewed 2026-11-04. Formulas and worked examples are checked by automated tests against independently computed values.